This country-specific Q&A provides an overview of Litigation laws and regulations applicable in Vietnam.
What are the main methods of resolving commercial disputes?
In Vietnam, commercial disputes are mainly resolved through litigation. ADR methods such as arbitration, mediation, and negotiation are also used. Whilst most commercial disputes have been submitted to the courts (as a traditional forum), recently there has been an increase in use of arbitration and mediation, which is expected to continue to grow.
What are the main procedural rules governing commercial litigation?
The main procedural law governing litigation, generally, is the Civil Procedures Code (the “CPC”). There are resolutions of the Justices Council of the Supreme Court that guide the implementation of the CPC in certain aspects. There are no specific rules that apply to commercial litigation only. However, specialised laws may provide for certain rules regarding commercial litigation. For example, the Enterprises Law does so in respect of derivative suits (Articles 72 and 161) and suits to invalidate certain corporate approvals (Articles 50.8(d) and 147). This means that in commercial litigation, specialised laws that have provisions applicable to commercial litigation must be taken into consideration.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
In Vietnam, the judicial system is comprised of four tiers of “people’s courts” (which include military courts).
The first tier is the district people’s courts (“District Courts”), which are the courts with general jurisdiction, including commercial claims. However, certain commercial matters are beyond their jurisdiction (such as disputes involving persons or assets located overseas), and these will fall under the jurisdiction of the second tier which is the provincial people’s courts (“Provincial Courts”). The Provincial Courts can act as courts of first instance, but mainly hear appeals from the District Courts.
The third tier is the High People’s Courts (“High Courts”). The High Courts are the final court of appeals for decisions of the Provincial Courts. The Provincial Courts and the High Courts are structured based on the following six specialised areas: criminal court, civil court, administrative court, economic court, family and juvenile court, and labour court.
Finally, the apex court is the Supreme People’s Court (“Supreme Court”). The primary power of the Justices Council of the Supreme Court is not to resolve appellate claims but to review judgments and decisions that have already become effective by cassation procedures or retrial procedures. The Justices Council may conduct a “special procedure” to review its own decisions in unusual cases (see #17 below).
How long does it typically take from commencing proceedings to get to trial?
Once a statement of claim is filed and accepted by a competent court, there is a two-month period in which the court will prepare a commercial case (other cases are usually subject to a longer time frame). During this period, the court may, for example, conduct its preliminary study of the case, consider if it needs to join any person with related interests and obligations, conduct a conciliation meeting (where applicable), hold meetings with the parties to review the court filings and exchange of evidence, etc. This preliminary period may be extended by one month (in respect of commercial cases) (CPC, Article 203.1).
After the preparation period, if the court finds that requirements for a trial are met, it will hold a trial which must be held within one month of the court’s decision. This period may be extended by a month if there is reasonable cause to do so (CPC, Article 203.4).
It should be noted that, in practice, the time frames may run longer than set out above, and it is not unusual to take six months to one year to get to trial.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
By law, court trials are ordinarily open to the public and only held behind closed doors in limited circumstances, including for the purpose of protecting State secrets, social morals, professional secrets, trade secrets or privacy (CPC, Article 15.2). As a general principle, court filings are not available to the public but remain equally accessible and usable amongst the parties to the proceedings at hearings or conciliation meetings. Courts may disclose the court filings only at the hearing under limited circumstances, for example, where the testimony given by a party at the hearing is in conflict with that given previously, or where the court deems necessary. Notwithstanding the foregoing, courts may decide not to disclose certain court materials in limited circumstances, including for the purpose of protecting State secrets, professional secrets, trade secrets or privacy. Transcripts of hearings are not available to the public and are only available for review by the procurator and participants to the hearing, usually immediately after the hearing is concluded. Certain decisions of the courts may be made publicly available as selective precedents on the online portal of the Supreme Court (on a no names basis).
What, if any, are the relevant limitation periods?
Generally, the limitation period for initiating civil lawsuits is three years, commencing from the date the plaintiff(s) knew, or should have known, that their lawful rights and interests were infringed (Civil Code, Articles 429 and 588). Certain disputes, however, are subject to a shorter limitation period, e.g., commercial disputes are subject to a two-year limitation period from the date when the lawful rights and interests of the plaintiff(s) are infringed, and the invalidation of civil transactions is generally limited to a two-year period.
Regardless of the above, there are no limitation periods applicable in some cases, such as, the protection of certain personal rights, protection of ownership rights and disputes over land use, or invalidation of transactions due to violation of the prohibition of law (Civil Code, Articles 132.3 and 155).
In respect of arbitration, the general limitation period for requesting an arbitration is two years, commencing from the date of the infringement of the lawful rights and interests of the claimant(s), unless otherwise provided in specialised laws (Law on Commercial Arbitration, Article 33).
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
Pre-action rules will apply if so required under specialised law. In those cases, the court will not, in principle, consider accepting a case, or adjudicate a dispute if pre-action rules are not complied with.
In commercial disputes, the Commercial Law provides certain time-limits for making demands against a defaulting party but is silent on the consequences of non-compliance, i.e., whether the non-defaulting party can initiate a lawsuit against the defaulting party (Commercial Law, Article 318). In practice, the courts will usually allow such disputes to go forward despite the failure of a plaintiff to comply with this requirement.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Proceedings will commence when the court issues a notice of acceptance of the case, after having received (from the plaintiff(s)) a statement of claim, together with supporting documents and evidence, and payment of the advance court fee (CPC, Articles 195 and 196).
Courts are responsible for the service of process (CPC, Article 22.1). Service of process can be done via various methods, including direct service, courier, third-party service providers (such as a bailiff), publication, or notification via mass media (CPC, Article 173)). Where the party is outside of Vietnam, Vietnamese courts may serve process via judicial assistance.
Each party to the proceedings is also obligated to serve the others with copies of litigation documents to the extent not yet obtained by them, except documents subject to non-disclosure (see #5 above) (CPC, Articles 70.9 and 172.3). In practice, once the plaintiff submits the statement of claim, the plaintiff can inform the adverse party that it is being sued in one of two ways, either by sending a copy of the statement of claim to the adverse party or requesting the court to do so.
How does the court determine whether it has jurisdiction over a claim?
The basic rule is that the District Court in the district where the defendant is located (i.e., the domicile of the individual defendant, or in the case of a legal person, the location of its head office) will have jurisdiction over a claim against it, although the parties can agree on being subject to the jurisdiction where the plaintiff is located. Disputes related to real estate are subject to the jurisdiction of the court at the district or province where the property is located (CPC, Article 39.1).
There are additional grounds for jurisdictions for specific claims. For example, tort claims may be filed with the court at the place where the tort occurred, or contractual claims may be filed with the court where the contract is performed. As can be expected, where the aforementioned results in more than one jurisdiction, the plaintiff may choose where to proceeds (CPC, Article 40.1).
When receiving the statement of claim, the court will also determine its jurisdiction according to the judicial hierarchy between District Courts and Provincial Courts, and the subject-matter of specialised courts at the provincial level (see #3 above). If the case falls under the jurisdiction of other authorities under specialised laws (for example, the local government over land disputes, arbitration or foreign court), then the court will refuse to resolve the case.
How does the court determine what law will apply to the claims?
Overall, Vietnamese law is uniform and the jurisdiction of a court in a specific region does not result in different laws being applicable, and where a dispute is brought before a Vietnamese court, the lex fori principle applies. Vietnamese law allows a choice of foreign law and, if certain legal requirements are satisfied, the court will apply this.
Where transactions involve foreign elements, the court will establish whether an international treaty is applicable, which either stipulates that the parties may choose the governing law or itself provides the applicable law. Where this is not the case, Vietnamese law shall apply in order to determine which governing law applies. Where none of the above is applicable, the governing law shall be the law of country which has the closest connection to the transaction (Civil Code, Article 664).
In what circumstances, if any, can claims be disposed of without a full trial?
Claims may be disposed of without a full trial in certain instances (CPC, Article 217.1). For example, the plaintiff withdraws its entire claim because a settlement agreement is reached, either out of court or through a conciliation held by the court, both of which, once recognised by the court, cannot be appealed and will not proceed to trial. The court may also, from the outset, dispose of a claim where it does not issue a notice of acceptance or, even thereafter, comes to the conclusion that a notice of acceptance should have not been issued.
What, if any, are the main types of interim remedies available?
Interim remedies are available under the CPC and a party may apply to the court to seek such relief. These may be sought on the grounds of urgency, threats to the life, health or assets, or to prevent evidence from being harmed to ensure the adjudication of the case or enforcement of the judgment (CPC, Article 111.1).
Injunctive relief, which is most commonly sought, includes:
Seizing assets forming the subject matter of the dispute;
Freezing bank accounts and/or other assets of the other party;
Prohibiting transfer or any change to the status of the disputed assets;
Banning exit from the country applied to debtors or payment obligators; and
Prohibiting or forcing performance of a specific act.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
After a claim has been commenced, the defendant(s) (and third parties with related interests and obligations, if any) submits a statement of reply/counterclaim (or statement of independent claim of a third party, if any), together with supporting documents and evidence, within fifteen days from the date of receipt of the case acceptance notice (CPC, Article 199). The timetable for submitting documents is imposed by the court but must be determined prior to the meeting held between the parties and the court to deal with evidence generally (CPC, Article 96.4). As described in #14, the parties can submit additional documents and evidence any time prior to, and even at, the hearing.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Claims and replies submitted to the courts should be accompanied with supporting documents and evidence. The disclosure of documents is typically finalised at a pre-hearing meeting held by the court. However, as a matter of statutory right, parties are entitled to submit further documents and evidence at any time thereafter, and, in practice, the courts may even allow the introduction of new documents and evidence at the hearing (CPC, Articles 6.1 and 96.4).
There is no concept of “discovery” in Vietnam, as is the case in the United States; however, disclosure of evidence is required through the aforementioned process, and the court has power to require disclosure of any document deemed relevant or necessary. Vietnamese law, similarly, does not explicitly provide for the concept of “legal privilege”. However, the rules governing lawyers’ practice provide for a privilege on non-disclosure of information in the attorney-client relationship, unless such privilege is set aside by the criminal law (Law on Lawyers, Article 25.1). Furthermore, documents containing “professional secrets” (as described in #5) can be prevented from disclosure.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
Witnesses may give, or be compelled to give, sworn testimony in writing, at the parties’ request or if the court deems necessary. This can be done in or outside of the court. Witnesses may also be summoned to the hearing to give oral testimony (CPC, Articles 78.8 and 99). Cross-examination may occur, either upon the request of a party or where the court deems it necessary. The court may decline a request for cross-examination should it deem it unnecessary. The testimony and cross-examination will be transcribed into a minute and acknowledged by the parties (CPC, Articles 99.2 and 100).
There is no concept of deposition under the CPC. However, written record of factual events and acts, duly made under the witness of the bailiff, upon request of a party, could be considered as a source of evidence in litigation.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert witnesses are permitted in the proceedings. This can be done upon the instance of a party or the court may request the parties to provide an evaluation or opinion from an expert with respect to any issues concerning the dispute. The court may, of its own accord, appoint an expert to provide a written opinion and may also summon the expert to the hearing to provide clarification on his or her written opinion (CPC, Articles 79 and 80.1(c)).
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
The first-instance judgment can be appealed within fifteen days from the announcement date thereof or, if the party did not attend the hearing, from its receipt of the judgment (CPC, Article 273.1). The courts of appeal with respect to first-instance judgments are the Provincial Courts or High Courts (see #3 above).
The Chief Judge of the High Courts, the Chief Procurator of the High Procuracy, the Chief Justice of the Supreme Court or the Chief Procurator of the Supreme People’s Procuracy may, on their own initiative, or upon a party’s request, issue a protest that calls for a cassation review or a retrial of the appellate judgment on limited grounds. The time-limit for issuing such a protest is, in case of cassation review, three years from the effective date thereof, unless there is reasonable cause to continue protesting upon expiry of such three year period (CPC, Articles 331 and 334) or, in case of retrial, one year from the date one of the above knew of the basis for retrial (CPC, Articles 354 and 355).
Decisions of the Justices Council of the Supreme Court may also be reviewed by itself under a “special procedure” on the limited grounds of material breach of law or discovery of new vital facts not previously known, and a request is made to do so by apex bodies in Vietnam (like the Judiciary Committee of the National Assembly, the Supreme Chief Procurator or the Supreme Chief Justice) (CPC, Article 358).
Interim decisions of the court may also be appealed. For example, decisions of the court on interim relief can also be challenged by the parties or the procuracy within three working days upon their receipt of such interim decisions, and the chief judge of the same court must handle the petition for review of interim decisions within three working days thereafter (CPC, Articles 140 and 141).
What are the rules governing enforcement of foreign judgments?
Foreign judgments are enforceable in Vietnam through the Ministry of Justice or the courts, and application must be made within 3 years from the effective date thereof (CPC, Article 432.1). Foreign judgments can be enforced in Vietnam on the basis of bilateral agreements on judicial assistance and the principle of reciprocity, amongst other reasons in Vietnamese law (CPC, Article 423). However, a foreign judgment may not be recognised if contrary to the fundamental principles of Vietnamese laws. The Justices Council of the Supreme Court is currently producing a resolution providing guidance on enforcement of foreign judgments, which is expected to be issued soon.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
In principle, the losing party bears the costs of litigation. Particularly, parties must pay advance court fees to the courts when initially submitting their claims, and eventually bear the court fees and other litigation costs as allocated in the judgment. Upon which, the parties will pay, or be reimbursed, the balance between the advance court fees and the actual litigation costs payable by them. However, certain professional fees (such as attorney fees) can only be recovered from the losing party if there is an agreement between the parties.
What, if any, are the collective redress (e.g. class action) mechanisms?
Vietnamese law does not cater to the concept of “class action” as such. However, the CPC does permit action taken by multiple plaintiffs against the same defendant(s) (where there are similar claims) (CPC, Article 188.2). The CPC also provides for “representative action”, taken by an organisation that represents a collective (e.g., trade union or consumer association) (CPC, Article 187).
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Third parties, having interests and obligations related to the dispute between the plaintiff(s) and defendant(s), may request the court to join to proceedings. The plaintiff(s) or defendant(s) may also request the court to join a third party, and the court will so join a third party to proceedings if it deems them necessary (CPC, Article 68.4).
The court may also (on parties’ request or of its own accord) consolidate two or more sets of separate proceedings. The consolidation may apply to collective redress, i.e., multiple plaintiffs against the same defendant (see #20 above) (CPC, Article 42).
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Third-party litigation funding does not exist as a formal concept in Vietnam. In principle, there is no patent reason as to why parties cannot enter into such an agreement. Although its enforceability remains questionable, it does not appear that such an agreement would be deemed contrary to social morals or as violating any prohibition of law. It is noted that a third-party funder would not be permitted to participate in legal proceedings directly and there is no formal process to ensure that it can receive the award of any compensation.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
The main advantage is the low cost of litigation. For example, if the amount being claimed is VND2,000,000,000 (approx. US$87,000), the court fee would be VND72,000,000 (approx. US$3,130). Also, the cost of legal counsel, on a US$ basis, is extremely low compared to other jurisdictions.
Vietnam has entered into various bilateral agreements on judicial assistance in respect of civil and commercial matters, and is also a member to international treaties regarding commercial and civil matters (e.g., CISG, Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, and Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters) which form the basis for litigating international commercial disputes in Vietnam.
On the other hand, litigating international commercial disputes in Vietnam is relatively time-consuming, especially to effect service abroad. The translation, notarisation, and legalisation of foreign documents to be admissible at Vietnamese courts can be costly and cause delays. Nonetheless, this is common to most jurisdictions and is not unique to Vietnam.
What, in your opinion, is the most likely growth area for disputes for the next five years?
The number of international investment disputes is increasing in Vietnam as FDI increases. Total FDI into Vietnam for 2019 was at record levels, with US$15.47 billion of US$20.38 billion being in M&A transactions. Using key investment areas, the most likely growth areas for disputes are M&A, EPC, and IT. However, the economic effects of the COVID-19 pandemic may influence trends (for example, Vietnam is preparing to ride the wave of global investment relocation due to COVID-19 effect).
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
The Supreme Court recently launched an online platform (https://nopdonkhoikien.toaan.gov.vn/trangchu.aspx) which facilitates the online submission of claims, as well as e-service of litigation documents. Online trials are expected to be implemented (rather than physical hearings). Selective precedents will also continue to be published by the Supreme Court, which will enhance the consistency and transparency of litigation in Vietnam.
How have the courts in your jurisdiction dealt with the COVID-19 pandemic and have you seen particular types of disputes arise as a result of the pandemic?
The Supreme Court has continuously issued directives to the subordinate courts in response to the COVID-19 pandemic. These include instructions to: effect the submission and delivery of litigation documents via postal services or online platforms; ensure social distancing; postpone upcoming meetings and hearings; maintain hygiene and safety at court venues; convene remote conferences and meetings; and promote online trials (if possible).
The COVID-19 pandemic has resulted in restructuring (including proposed layoffs) and various non-performance of agreements (often defended on grounds of force majeure). These involve, for example, termination of lease agreements, supply agreements, suspended construction projects and so forth. Civil disputes, in general, as well as in commercial transactions, are expected to rise in the next two to five years.